MINISTER OF STATE IN THE MINISTRY OF FINANCE ( SHRI YASHWANT SINHA)
(a), (b), (c), (d), (e), (f) & (g): A Statement is laid on the
Table of the House.
Statement referred to in the Lok Sabha Starred Question No.83
(Position No. 3) regarding Recession in Indian Economy by
Shri G. Mallikarjunappa and Shri Iqbal Ahmed Saradgi for
answer on November 23, 2001.
(a) No, Sir.
(b) Does not arise.
(c), (d), (e), (f) & (g): The trends in the economy are closely
monitored and under constant review and appropriate measures
taken in the light of emerging situation as and when necessary.
The views and suggestions from various organisations including
Prime Minister`s Council on Trade and Industry are given due
consideration in formulating policies keeping in view the
government`s broad policy objectives and overall macro-economic
situation. Despite a moderate overall GDP growth in the first
quarter of the current financial year and an uncertain external
environment, the fundamentals of the economy as reflected in
low inflation, high foreign exchange reserves, large foodgrains
stocks, are still very strong. With a view to promoting growth,
the broad strategy enunciated in the Budget for 2001-02 has
emphasized speeding up of agricultural sector reforms and
better management of the food economy; intensification of
infrastructure investment, continued reform in the financial
sector and capital markets, and deepening of structural reforms
through removal of remaining controls constraining economic
activity; human development through better educational
opportunities and programmes of social security; stringent
expenditure control of non-productive expenditure; acceleration
of the privatization process and restructuring of public
enterprises and; revenue enhancement through widening of the
tax base and administration of a fair and equitable tax regime.
Besides, measures have been taken to stimulate domestic demand.
These among others include reduction in interest rates on
contractual savings, tax cuts through abolition of surcharge
payable by corporates and non-corporates, further scaling down
of peak customs tariff, major simplification in the excise duty
regime, etc. The Budget for 2001-2002 has also provided enhanced
central plan outlays for key infrastructure sectors. Reserve Bank
of India on the basis of a review of macro-economic and monetary
developments took certain monetary measures keeping in view
need for adequate liquidity to meet credit growth and support
revival of investment demand consistent with price stability.
These measures included further reduction in the bank rate
from 7 per cent to 6.5 per cent, rationalisation in the Cash
Reserve Ratio for the banking system and reduction in the
maximum interest rate chargeable on export credit by 1.0 percentage
point for a period of six months with effect from September
26, 2001. These specific measures to stimulate demand in the
backdrop of Budget strategy are expected to have a favourable
impact on growth.
